Power needed for mining projects: reports

Ashley Fitzpatrick
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Premier, minister say Muskrat Falls will allow for growth

Premier Kathy Dunderdale

Premier Kathy Dunderdale was preaching to the choir when she spoke about power needs for industrial developments in Western Labrador at the opening of the Mineral Resources Review 2012 conference Thursday morning.

Dunderdale addressed delegates at the Delta Hotel and Conference Centre in St. John’s, shortly after the government released reports on both the economic value and power needs of proposed Labrador mines.

“There are huge opportunities in Labrador, and you know, many of these companies have been planning for years to take advantage of those opportunities. And in all of their discussions with us over the years, power has been an issue,” the premier told reporters following the speech.

The premier’s speech touched on points repeated since the final cost estimates on the Muskrat Falls hydro development were released earlier this week.

The premier said the 824 megawatts from Muskrat Falls will be enough to meet immediate power needs for Labrador mines post-2017, on top of supplying power to customers on the island and, should the Maritime Link move ahead, customers in Nova Scotia.

Beyond that, “there’s a whole suite of options that become enabled once we’ve developed Muskrat Falls, and that project then includes the Maritime Link. So there’s all kinds of opportunities then,” she said, pointing to small wind and hydro projects, or the development of a dam at Gull Island for an additional 2,250 megawatts of power.

“The one thing we do know for sure is that development can’t happen in Labrador without access to power.”

That fact is also being conveyed within the two new reports on the provincial mining industry.

One was produced by staff at the Department of Natural Resources and the second, commissioned by the government, was produced by economist Wade Locke with Strategic Concepts, a consulting firm in which he is a senior partner. Both have been made available at the government’s new site for Lower Churchill information: www.powerinourhands.ca.

The report from Locke and Strategic Concepts — titled “Economic Impact Analysis of Iron Ore Mining Industry in Labrador 2011-31” — sets out how the iron ore industry in western Labrador contributes to the provincial economy through employment, taxation revenue and contributions to the gross domestic product.

Looking at the potential for growth, it suggests production in Labrador could grow from the current 26 million tonnes per year to 81 million tonnes, if all projects being proposed are actually developed.

Over a 21-year period, it states, such growth would result in an additional $80 billion in new capital and operating expenditures, 358,000 person years of employment and an additional $17.5 billion in tax revenue.

However, a lack of power and labour are potential constraints on that growth.

The latest information from the Department of Natural Resources — a report titled, "Labrador mining and power: how much and where from?" — states there is the potential for $10-15 billion in new investment in Labrador mining projects in the next decade, if the power is available.

It provides best and worst-case scenarios in terms of the availability of power, stating demand from Labrador mining projects will likely surpass the current supply in 2015-17.

It recommends Muskrat Falls be brought online to add power to the system.

“The economics of the industry demand competitively priced power. And we know what the power is costing Quebec and we know we have to be competitive with Quebec,” Minister of Natural Resources Jerome Kennedy told conference delegates, speaking before the premier’s address.

The government’s information was well-received by industry players.

“As the premier rightfully highlighted this morning, mining is an energy-intensive process and ... hydro-based electrical energy, in particular, is an absolute asset for any mining development. So we’re delighted as a mining industry to hear that the Muskrat Falls will proceed as planned and the numbers do support the project,” said Alderon Iron Corp. president and CEO Tayfun Eldem.

Alderon does not need the Muskrat Falls development to get started on its Kami iron ore project, near Labrador City-Wabush.

“But again, as the premier said, in 2016-17 there’s essentially no more power coming out of Churchill Falls to allow for incremental development and Muskrat Falls fills that void and fills it just in time,” Eldem said.

The chairman of Mining Industry NL, George Ogilvie, announced that organization’s decision to support the development. Ogilvie is also president and CEO of Rambler Metals and Mining.

Reports, speeches and opinions on the project came even as the construction work at Muskrat Falls continued near Happy Valley-Goose Bay.

Nalcor Energy announced it will be proceeding with “further site work” in the coming weeks, despite no official sanction decision by the provincial government. The work is to include some excavation and installing temporary accommodations for 250 workers.

“The decision to undertake these activities was based on an evaluation of the costs, the potential risks to the project schedule, and the long-term value of the work,” Nalcor Energy president and CEO Ed Martin stated.

“A delay in the start of site excavation, until spring 2013, would ultimately impact the overall project schedule and first power from Muskrat Falls could be over six months. This would result in additional carrying costs, including an estimated $200 million in additional costs for continued operation of the Holyrood plant — a cost that would ultimately be passed on to island consumers in increased electricity rates.”

Liberal MHA Yvonne Jones said she would like more information to be made available on contracts associated with the continuing work.




Organizations: Mineral Resources Review 2012, Maritime Link, Department of Natural Resources Strategic Concepts Alderon Iron Mining Industry NL Rambler Metals

Geographic location: Labrador, Falls, Nova Scotia.Beyond Gull Island Quebec Happy Valley Holyrood

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Recent comments

  • Tim Jamison
    November 03, 2012 - 21:29

    The lack of electrical infrastructure in Labrador is why the new iron mines will be doing their processing (hundreds of high-paying, semi-permanent jobs) in the US. This is a good thing, according to the libbies and dippers

  • Cold Future
    November 02, 2012 - 12:17

    At least some true things are coming out. The government should give up on untruths like Its the least cost option, it will compete with Quebec for electricity in Labrador, the power is needed on the island, we will have blackouts, Holyrood must be shut down because of polution, we can't clean up Holyrood to provide cheap reliable electricity well into the future, the Nova scotia power share is not a giveaway and give up treating us like gullible sheep with wool in our eyes with statements like: you will save some amount on your bills in the long run from the other options, we must start now to plan for upper churchill power, we must build a 50 year life facility when cheap power is available in 25 years, oil/gas will go up to the point of uncompetitivenss with hydro, other options will go up in price by as much or more. Bottom line: Taxpayers need to know how much the taxation will be and how much hardship we will endure to subsidize this venture to the benefit of mainlanders and mining interests looking for sweetheart deals off our backs. Give up parading people with vested interests who will benefit from short term contracts, employment and spinoffs and preparing reports with conclusions favouably to the power warehousing agenda. If the energy plan is GFY Quebec, we can't negotiate with you we must go around you even at significantly higher cost, say so and get on with it.

  • Political Watcher
    November 02, 2012 - 10:06

    "The chairman of Mining Industry NL, George Ogilvie, announced that organization’s decision to support the development." Asking the Chairman of the mining industry to endorse Muskrat Falls is like asking the editorial board of " O" Magazine to endorse putting Oprah on the cover. Any company or industry who sees cheap power at someone else's expense would be crazy not to endose the project.

  • Nasty Nate
    November 02, 2012 - 09:43

    Sad part is Kathy, you are full of it. How soon you forget comments made yesterday, "Meanwhile, Dean Journeaux with New Millennium Iron says Muskrat Falls is necessary for his $5-billion project to go ahead." Last time I looked at a map this venture was inside the Quebec border, dame as your buddy Danny Williams and his Alderon venture. Might be time for a criminal investigation if you ask me. Someone needs to pay for this potential attempted fraud unless some open and honest answers are brought forward pretty quick. The tax payers of Canada want answers now, just not those of this province.

  • Maurice E. Adams
    November 02, 2012 - 07:42

    What a travesty. The truth comes out. Island ratepayers do not need Muskrat Falls power --- Labrador mines 'want' it. Even they don't need it, as over the fence in Quebec is all the power they will ever need at prices Muskrat Falls can only match by virtually giving it away. ..... Captive island ratepayers will not only be giving it away, we will be virtually paying the mining industry to take it for 2-3 cents per KWh while it will cost us 37 cents per KWh (and paid for in part by the precious one time windfall revenues from our offshore oil). Our children and grandchildren will not look kindly on us if we lock them into a legalized, 50-year theft of resources and revenues that is as much theirs as it is ours. We may have the legal, but not the moral right to take away their future.

  • meincbn
    November 02, 2012 - 07:10

    I believe if they are going to let mining companies in Labrador have access to cheap power, then they should insist that ALL PROCESSING OF THIS ORE TAKE PLACE IN THIS PROVINCE and not let the mining companies ship one ounce of the concentrate down the tracks to Quebec. Then, and only then, will I be in favor of this "deal".

    • Rad Avery
      November 02, 2012 - 07:50

      Hi I guess you could have taken a more unflattery picture of the premier but honestly this is too much.

  • Fred
    November 02, 2012 - 06:47

    Jones is not coming out against Muskrat Falls like before. Wonder why?